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Root (ROOT)

Root Insurance is the nation’s first licensed insurance carrier powered entirely by mobile. Root was founded on the principle that auto insurance rates should be based primarily on driving behaviors, not demographics. Using mobile technology and data science, Root offers personalized, fair rates to good drivers all through an easy-to-use app. Root is headquartered in Columbus, Ohio, with renters insurance available in Arkansas, Missouri, Ohio, Georgia, Kentucky, Nevada, Tennessee, and Utah, and auto insurance currently available to drivers in Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, Nebraska, New Mexico, Nevada, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and West Virginia.

Company profile

Ticker
ROOT
Exchange
Website
Employees
Incorporated
Location
Fiscal year end
Former names
Root Stockholdings, Inc.
SEC CIK
Subsidiaries
Caret Holdings, Inc. • Root Enterprise, LLC • Root Insurance Agency, LLC • Root Insurance Company • Root Lone Star Insurance Agency, Inc. • Root Property & Casualty Insurance Company • Root Reinsurance Company, Ltd. • Root Scout, LLC ...
IRS number
842717903

ROOT stock data

Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

8 Aug 22
27 Sep 22
31 Dec 22
Quarter (USD) Jun 22 Mar 22 Dec 21 Sep 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD) Dec 21 Dec 20
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Cash burn rate (est.) Burn method: Change in cash Burn method: Operating income Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 886.6M 886.6M 886.6M 886.6M 886.6M 886.6M
Cash burn (monthly) 16.37M 7.29M 29.97M 34.1M 17.9M 23.48M
Cash used (since last report) 48.07M 21.42M 88.02M 100.16M 52.58M 68.98M
Cash remaining 838.53M 865.18M 798.58M 786.44M 834.02M 817.62M
Runway (months of cash) 51.2 118.7 26.6 23.1 46.6 34.8

Beta Read what these cash burn values mean

Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
31 Aug 22 Christopher Olsen Class A Common Stock Conversion Acquire C Yes No 0 1,593 0 1,593
31 Aug 22 Christopher Olsen Class A Common Stock Conversion Acquire C Yes No 0 54,382 0 54,382
31 Aug 22 Christopher Olsen Class A Common Stock Conversion Acquire C Yes No 0 112,469 0 112,469
31 Aug 22 Christopher Olsen Class B Common Stock Class A Common Stock Conversion Dispose C Yes No 0 1,593 0 0
31 Aug 22 Christopher Olsen Class B Common Stock Class A Common Stock Conversion Dispose C Yes No 0 54,382 0 0
31 Aug 22 Christopher Olsen Class B Common Stock Class A Common Stock Conversion Dispose C Yes No 0 112,469 0 0
31 Aug 22 Drive Capital Overdrive Fund I Class A Common Stock Conversion Acquire C Yes No 0 1,593 0 1,593
31 Aug 22 Drive Capital Overdrive Fund I Class A Common Stock Conversion Acquire C Yes No 0 54,382 0 54,382
31 Aug 22 Drive Capital Overdrive Fund I Class A Common Stock Conversion Acquire C Yes No 0 112,469 0 112,469
31 Aug 22 Drive Capital Overdrive Fund I Class B Common Stock Class A Common Stock Conversion Dispose C Yes No 0 1,593 0 0
13F holders Current Prev Q Change
Total holders 128 122 +4.9%
Opened positions 26 26
Closed positions 20 22 -9.1%
Increased positions 30 33 -9.1%
Reduced positions 27 25 +8.0%
13F shares Current Prev Q Change
Total value 935.11M 1.1B -15.0%
Total shares 220.03M 214.11M +2.8%
Total puts 1.67M 2.5M -32.9%
Total calls 2.44M 4.87M -49.9%
Total put/call ratio 0.7 0.5 +33.9%
Largest owners Shares Value Change
Ribbit Capital IV 33.73M $529.94M 0.0%
Ribbit Capital GP IV 29.49M $35.09M 0.0%
Drive Capital Overdrive Fund I 25.98M $80.54M 0.0%
Redpoint Omega II 15.14M $46.93M 0.0%
SIVB SVB Financial 14.09M $43.69M 0.0%
CVNA Carvana 14.05M $72.66M 0.0%
Silver Lake Group, L.L.C. 9.26M $11.02M 0.0%
Schusterman Interests 8.75M $10.41M 0.0%
BLK Blackrock 8.48M $10.1M +417.1%
Daniel Manges 6.17M $19.12M 0.0%
Largest transactions Shares Bought/sold Change
BLK Blackrock 8.48M +6.84M +417.1%
Millennium Management 2.19M -2.96M -57.4%
STT State Street 2.53M +2.19M +661.9%
Point72 Asset Management 1.67M +1.67M NEW
Vanguard 5.18M -1.64M -24.1%
Geode Capital Management 2.3M +1.51M +192.5%
Balyasny Asset Management 2.33M +1.2M +107.2%
HRT Financial 0 -1.07M EXIT
Full18 Capital 0 -1.05M EXIT
NTRS Northern Trust 1.17M +960.58K +448.8%

Financial report summary

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Competition
GEICO
Risks
  • We have a history of net losses and could continue to incur substantial net losses in the future. We may not continue to grow at historical rates or achieve or maintain profitability in the future.
  • We may lose existing customers or fail to acquire new customers, and our future growth and profitability depend in part on our ability to successfully operate in an insurance industry that is highly competitive. If we are unable to maintain the levels of customer service or continue technological innovation and improvements, our prospects for future growth may be materially adversely affected.
  • We may require additional capital to support business growth or to satisfy our regulatory capital and surplus requirements, and this capital might not be available on acceptable terms, if at all.
  • The COVID-19 pandemic has caused disruption to our operations and may negatively impact our business, key metrics, and results of operations in numerous ways that remain unpredictable.
  • We rely on telematics, mobile technology and our digital platform to collect data points that we evaluate in pricing and underwriting our insurance policies, managing claims and customer support, and improving business processes. To the extent regulators prohibit or restrict our collection or use of this data, our business could be harmed.
  • We or Carvana may fail to develop an embedded insurance product and/or fail to perform under the parties’ commercial agreement.
  • We depend on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our mobile app both rapidly and cost-effectively. If these third parties change their listings or increase their pricing, if our relationships with them deteriorate or terminate, or if other factors related to these third parties arise which are beyond our control, we may be unable to attract new customers rapidly and cost-effectively, which would adversely affect our business and results of operations.
  • Operating system platforms and application stores controlled by third parties, such as Apple and Google, may change their terms of service or policies in a manner that increases our costs or impacts our ability to distribute our mobile app, collect data through it and market our products.
  • Our expansion within the United States and any future international expansion strategy will subject us to additional regulatory approvals and costs and risks, and our plans may not be successful.
  • Our technology platform may not operate properly or as we expect it to operate.
  • Regulators may limit our ability to develop or implement our telematics-based pricing model and/or may eliminate or restrict the confidentiality of our proprietary technology.
  • We are subject to market conduct examinations by state insurance regulatory authorities in any state in which our domestic insurance subsidiaries issue insurance policies, which could result in adverse examination findings and necessitate remedial actions.
  • Our exposure to loss activity and regulation may be greater in states where we currently have most of our customers: Texas, Georgia and Louisiana.
  • We are subject to stringent and changing privacy and data security laws, regulations, and standards related to data privacy and security, increasing the complexity of compliance. Our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability, or adversely affect our business.
  • Data security breaches, or real or perceived errors, failures or bugs in our systems, website or app could impair our operations, compromise our confidential information or our customers’ personal information, damage our reputation and brand, and harm our business and operating results.
  • Our brand may not become as widely known or accepted as incumbents’ brands or the brand may become tarnished.
  • We rely on highly skilled and experienced personnel and if we are unable to attract, retain or motivate key personnel or hire qualified personnel, our business may be seriously harmed. In addition, the loss of key senior management personnel could harm our business and future prospects.
  • New legislation or legal requirements may affect how we communicate with our customers, which could have a material adverse effect on our business model, financial condition, and results of operations.
  • Denial of claims or our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition, results of operations, and prospects.
  • Unexpected increases in the frequency or severity of claims may adversely affect our results of operations and financial condition.
  • Failure to maintain our risk-based capital at the required levels could adversely affect our ability to maintain regulatory authority to conduct our business.
  • We may be unable to prevent, monitor or detect fraudulent activity, including policy acquisitions or payments of claims that are fraudulent in nature.
  • We rely on our mobile application to execute our business strategy. Government regulation of the internet and the use of mobile applications in particular is evolving, and unfavorable changes could seriously harm our business.
  • Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.
  • Some of our products and services contain open source software, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative effect on our business.
  • Claims by others that we infringed proprietary technology or other intellectual property rights could harm our business.
  • If our customers were to claim that the policies they purchased failed to provide adequate or appropriate coverage, we could face claims that could harm our business, results of operations and financial condition.
  • If we are unable to underwrite risks accurately or charge competitive yet profitable rates to our customers, our business, results of operations and financial condition will be adversely affected.
  • We are subject to assessments and other surcharges from state guaranty funds, which may reduce our profitability.
  • Litigation and legal proceedings filed by or against us and our subsidiaries, including shareholder litigation related to the initial public offering, could have a material adverse effect on our business, results of operations and financial condition, and may divert management’s attention and resources away from our business.
  • Our ability to utilize our net operating loss carryforwards may be limited.
  • The insurance business, including the market for automobile, renters and homeowners insurance, is historically cyclical in nature, and we may experience periods with excess underwriting capacity and unfavorable premium rates, which could adversely affect our business.
  • Reinsurance may be unavailable at current levels and prices, which may limit our ability to underwrite new policies. Furthermore, reinsurance subjects us to counterparty risk and may not be adequate to protect us against losses, which could have a material effect on our results of operations and financial condition.
  • Reinsurance subjects us to risks of our reinsurers and may not be adequate to protect us against losses arising from ceded insurance, which could have a material effect on our results of operations and financial condition.
  • We are subject to extensive regulation and potential further restrictive regulation may increase our operating costs and limit our growth.
  • A regulatory environment that requires rate increases to be approved and that can dictate underwriting practices and mandate participation in loss sharing arrangements may adversely affect our results of operations and financial condition.
  • State insurance regulators impose additional reporting requirements regarding enterprise risk on insurance holding company systems, with which we must comply as an insurance holding company.
  • We rely on technology and intellectual property from third parties for pricing and underwriting our insurance policies, handling claims and maximizing automation, the unavailability or inaccuracy of which could limit the functionality of our products and disrupt our business.
  • We are subject to payment processing risk.
  • Our success depends upon the insurance industry continuing to move online at its current pace and the continued growth and acceptance of online and mobile app-based products and services as effective alternatives to traditional offline products and services.
  • Our actual incurred losses and LAE may be greater than our loss and LAE reserves, which could have a material adverse effect on our financial condition and results of operations.
  • Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results.
  • Unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations.
  • Failure to meet the continued listing requirements of Nasdaq could result in delisting of our Class A common stock, which in its turn would negatively affect the price of our Class A common stock and limit investors’ ability to trade in our common stock.
  • The dual class structure of our common stock will have the effect of concentrating voting control with our executive officers, directors and their affiliates, which will limit your ability to influence the outcome of important transactions.
  • Applicable insurance laws may make it difficult to effect a change of control.
  • We do not intend to pay dividends on our Class A common stock so any returns will be limited to the value of our stock.
  • As a public company, we are subject to more stringent federal and state law requirements. We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
  • If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our Class A common stock may decline.
  • Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
  • Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
  • Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
  • Future acquisitions or investments could disrupt our business and harm our financial condition.
  • We expect a number of factors to cause our results of operations to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.
  • New or changing technologies, including those impacting personal transportation, could cause a disruption in our business model, which may materially impact our results of operations and financial condition.
  • Future sales of our Class A common stock in the public market by current shareholders could cause the market price of our Class A common stock to decline.
Management Discussion
  • N.M. - Percentage change not meaningful
  • Net premiums earned decreased $6.5 million, or 8.0%, to $74.7 million for the three months ended June 30, 2022 compared to the same period in 2021. The decrease was primarily due to lower policies in force as a result of reduced marketing expenditures, partially offset by an increase in premium per policy resulting from rate actions.
  • During the three months ended June 30, 2022 and 2021, we ceded approximately 56.3% and 55.1% of our gross earned premiums to third-party reinsurers, respectively. The change in ceding percentage between the periods was primarily driven by a higher proportion of our gross earned premiums being subject to reinsurance treaties, partially offset by the decrease in gross earned premiums.

Content analysis

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability
H.S. sophomore Good
New words: abetted, breach, breached, California, carryback, consulting, contract, enriched, fiduciary, forma, indefinitely, motion, moved, nominal, owed, permanently, properly, recession, resolution, Restated, shareholder, slightly, split, subcommittee, suspended, taxpayer, unfavorable, unjustly, usability, usage, verified, wasted
Removed: added, agent, convertible, exceed, growing, percent, positive, preferred, reference, representing